Modified rate contributors who have self-employed income from a trade or profession, are liable for PRSI contributions on this income and any unearned income they have.

From 1st January 2014, employed contributors and occupational pensioners aged under 66 years whose only additional income is unearned may be liable for PRSI contributions on this income.

How is PRSI Calculated?

PRSI contributions will be payable on the following basis:

At the appropriate rate for an employee on all reckonable earnings (including notional pay).

The employer's share at the appropriate rate on the reckonable earnings of the employee (including notional pay)/ The employer's contribution for classes A and H includes a 0.7% National Tranining Fund Levy.

For the self-employed at Class S (social insurance at 4% an ALL reckonable income).

Employees covered under Classes A, B, C, D and H with reckonable earnings of not more than €352 do not pay PRSI for that week. However, the employer's share of PRSI remains payable as normal. Employees continue to be covered for the benefits and pensions appropriate to their PRSI Class. Once earnings exceed €352 both employee and employer PRSI is charged.

Reckonable earnings for PRSI purposes are gross pay including notional pay (or benefit in kind) if applicable, plus superannuation and permanent health insurance contributions made by an employee. These payments may be allowable for income tax purposes.

PRSI CONTRIBUTION CLASSES

How are PRSI rates determined?

In general, PRSI contribution classes are decided by the nature of a person's employment. PRSI contribution classes are further divided into subclasses – the sub class is determined by the amount of employee's weekly gross reckonable earnings: 0 and 1 common to most classes, and X applicable to Class A, B, C, D and H only.

Certain sub-classes also cater for specific schemes;

Sub-classes A8 and A9 apply to Community Employment participants and people on Jobs Initiative

Sub-classes A4, A6 and A7 are used for the Employers Exemption Scheme

The type of employment in each PRSI contribution class and the social insurance benefits are outlined in SW 14.

Deciding the correct PRSI Class

If there is any doubt as to whether PRSI should be paid or which Class of PRSI should apply, the Department's Scope Section may be asked to decide the issue. (See separate guideline on Scope)

Where a decision results in the PRSI Class changing to a higher rate of PRSI, arrears will be collected by a Social Welfare Inspector from the Employer.

Where a decision results in the PRSI Class changing to a lower rate of PRSI, a refund can be claimed from PRSI Refunds Section, after the tax year ends. However, if the decision refers to the current tax year the employer should make the necessary adjustment to correct the error before the end of the tax year.

Refunds

If a person has overpaid PRSI contributions an application for a refund should be made after the tax year ends. With effect from 1 January 2010, an application for the return of PRSI contributions must be made within four years of the last day of the contribution year in respect of which the contributions concerned were paid.

COLLECTION OF CONTRIBUTIONS

Employees

Most employees pay PRSI through Revenue's PAYE system. However, employees who do not pay tax through the PAYE system pay PRSI on their earnings through the special collection system operated by the Department of Employment Affairs and Social Protection. Note: Employees who hold PAYE Exclusion orders pay PRSI through the PAYE system with effect from 1st January 2011.

The special collection system includes employees:

who continue to be insured under Irish social security law while working abroad under provisions of EU Regulations, Bilateral Agreements or Statutory Instrument 312 of 1996.

who pay PRSI as employees but are self-assessed for income tax purposes - for example, sub-postmasters, social welfare branch managers and medical consultants employed on a fee basis by the Health Service Executive (HSE).

who are employees of Embassies and certain conditions apply.

who are in receipt of Share based remuneration where the employee realises a gain in respect of tax exempt share options granted and at the time the options are exercised, the employee is no longer an employee of the employer who granted the options (see PRSI SBR 1 on www.welfare.ie).

who are Domestic Employees employed in the home of their employer on domestic duties only, and who earn less than €40 per week in the domestic employment (see leaflet IT 53 on www.revenue.ie).

Note:The rates charged for using 1890 (LoCall) numbers may vary among different service providers.

Self-employed

In general, the vast majority of self-employed people pay their PRSI contributions to the Revenue Commissioners when paying their income tax. However, there are certain categories of people who do not, such as:

A self-employed Company Director where PRSI is deducted under the PAYE system

Those with income of €5,000 or over and who have been advised by the Inspector of Taxes that they need not make a return of income, are liable to pay a flat rate PRSI contribution to

Note:The rates charged for using 1890 (LoCall) numbers may vary among different service providers.

CLASSES OF CONTRIBUTIONS IN DETAIL

Private/Public Sector Employments

(Classes A, J and E)

PRSI Class A

People within CLASS A:

People in industrial, commercial and service-type employment who are employed under a contract of service with reckonable pay of EUR38.00 or more per week from all employments; Civil and Public Servants recruited from 6 April, 1995 and Community Employment participants from 6 April, 1996.

People whose employment is of a subsidiary nature or of inconsiderable extent, e.g. people insurable at Class B, C, D or H in their main employment and who have a second job; attendants at Department of Education Examinations; Presiding Officers and Poll Clerks at Elections, and R.D.F. members on annual training.

Class J Benefits

Occupational Injuries Benefits

PRSI Class E

People within CLASS E:

Ministers of religion employed by the Church of Ireland Representative Body

Non-employee income

(Classes K, M, S and P)

PRSI Class K

People within CLASS K:

Class K applies to certain public representatives (the President, the holder of a "qualifying office", member of the Oireachtas and the judiciary, certain military judges, the Attorney General, the Comptroller and Auditor General, member of a local authority and certain members of the European Parliament), who earn over €5,200 a year. These Public Office holders pay PRSI at a rate of 4% on all income.

Any of these specified public representatives who earn €5,200 a year or less (€100 a week or less) have a nil liability – see Class M.

Class K also applies to the additional earned self-employed income from a trade or profession of a modified rate contributor and on any unearned income they have.

From 1st January 2014, Class K may also apply to the unearned income of employed contributors and occupational pensioners aged under 66 years where this is the only additional income.

Class K Benefits

Nil

PRSI Class M

People within CLASS M:

PRSI Class M is used for people with no contribution liability such as:

employees under age 16 or

people aged 66 or over (including those previously liable for Class S)

persons in receipt of occupational pensions or lump-sum termination payments

people within Class K with a nil liability (public office holders with a weekly income of less than €100 a week).

Class M Benefits

Occupational Injuries Benefits, in certain cases

PRSI Class S

People within CLASS S:

Self-employed people such as farmers, certain company directors, people in business on their own account and certain people with income from investments, rents and maintenance.

PRSI Class P

(Optional)

People within CLASS P:

Sharefishermen/women who are classified as Self-Employed and who are already paying PRSI under Class S. This contribution is over and above the PRSI paid under Class S. The minimum annual contribution for Class P is EUR 200.